Startup general interest

Alignment before freedom

There’s a big multi-decade trend towards giving employees more freedom over how they spend their time. There are two drivers. Firstly, as the world changes faster and faster, quick response to new situations has become more of a competitive advantage and companies that empower front line employees to make decisions are winning over companies that have to wait for management to decide. The second, related, and more recent driver is that the best employees increasingly want to work in organisations that give them a large amount of control over their day to day activities. As Dan Pink correctly identified in his seminal book “Drive”, autonomy makes us happy.

The first step many companies took was to start managing by outcome, telling employees what they they should achieve rather than what to do, and then giving them autonomy over how they do it. The OKR system that many of you know is designed for this environment. Management set company goals which are then cascaded down through the organisation to individuals who figure out for themselves how best to achieve their objectives.

In the last five it so years radical CEOs have taken the trend to empowerment to the next level and given staff the power to decide what they do as well as how they do it. These CEOs want their employees to love their companies (and maybe love them) and to maximise productivity by allowing people to work on what they think is most important. Some of these experiments have worked well, most famously at Valve, where they have extraordinary employee loyalty and great creativity.

Other experiments have worked less well, often because the staff they give freedom to haven’t all pulled in the same direction. In other words they have found themselves with an alignment problem. I have seen examples in recent weeks where alignment issues resulted in productivity sapping disagreements over investing in new products and the desirable rate of growth. These are legitimate differences of opinion with no right answer and once someone has been given control over what they do there is little intellectual basis for imposing a product decision or rate of growth on them.

These companies have created a leadership challenge that could have been avoided. They gave their employees freedom before they had alignment and then when they tried to force alignment it was perceived as a removal of freedom that went against the ethos of the company. That contrasts with companies that have forced alignment first and then gave employees freedom afterwards. The experience of workers in these businesses is only one of gain.

The answer then is to only give freedom when employees are aligned.

This post is long enough already so I won’t write about how to gain alignment save to say that one way is to distil what the company does into a couple of simple phrases (at Forward Partners our job is to make great investments and deliver amazing help to our partner companies) and then align company and personal objectives with those phrases.